CE Course: 34 ways to be a better advisor

Earn CE credits

“34 ways to be a better advisor” is eligible for CE credits. See Accreditation details for more information.

Course summary: The authors identify 34 concrete, detailed strategies to improve client relationships, perform better discovery and give better advice. Please note while the practice management lessons within this course are timeless, the regulatory content is current as of December 2017.

SECTION ONE: 10 steps to making the fee conversation resonate

“The single biggest problem in communication is the illusion that it has taken place.” – George Bernard Shaw

Client Relationship Model Phase 2 (CRM2) and new regulations from the Canadian Securities Administrators mean the cost of advice and personal rates of return will be put under the microscope for Canadian investors. For some, this information will be a real eye-opener.

Multiple polls have shown that Canadians don’t understand how advisors are paid. For instance, a 2016 Tangerine Bank study found that 36% of Canadians think they don’t pay investment fees.

There’s no getting around it – many investors still think investment advice is free. And while most advisors have had conversations with their clients about investment costs, that information doesn’t always register, and even if it does, investors can find it confusing. Open, transparent conversations around fees and value can be challenging, but there are effective communication strategies you can use as we enter a new era of fee-disclosed financial advice.

10 steps for a successful value and fee conversation

Using research and best practices from top advisors, we’ve created a process to help you conduct conversations that resonate with your clients. This includes critical steps to ensure your clients understand the impact of your advice, as investment costs are only an issue in the absence of value. For your top clients, we recommend scheduling face-to-face meetings to tackle this discussion in person.

STEPS FOR SUCCESS

1. Start with a well-positioned opening statement.

This is not as simple as it sounds. Your statement should be well thought out, memorable and succinct. Clients don’t want to hear a cookie-cutter script, so authenticity is critical.

Example: “As you know, I do everything possible to ensure my clients are well-informed and confident about our investment process. Today, I’d like to speak to you about changes we’ve made to serve you better. I want to make certain you understand the costs associated with investing and I’ll outline the services you’re receiving for the fees you’re paying.”

2. Highlight the changes.

Draw your clients’ attention to what will be different on their reports, how it impacts them and when they’ll see the changes.

Example: “In January 2017*, we will be launching new reports which help us provide full disclosure to our clients. You will see clearly how your investments are performing as well as a breakdown of the costs you’re paying, in actual dollar amounts.”

*Use the date when your clients will be receiving their first Annual Charges and Compensation Report and Performance Report in the new fully disclosed format.

3. Explain your approach to wealth (your philosophy).

Remind existing clients of what you do by providing your definition of wealth management. Take time to craft this message – it summarizes your value and forms part of your personal brand. Include your unique skills and services, and examples of how you’ve helped clients achieve their goals.

For instance, you could provide a marketing piece like the one below:

4. Re-visit your process.

Outline the process you follow when working with clients. Below is an example of a process for creating and monitoring a customized wealth plan.

5. Show your deep understanding of the client.

You have a relationship with your client unlike any other. Create a customized version of the Client Storyboard, shown below, including key information for each category from your client notes. Ask the client if anything has changed since you last met.

The Client Storyboard is designed to highlight the depth of the client/advisor relationship and demonstrate your knowledge of the client’s holistic life picture.

6. Provide a visual of what you’ve done.

Clients often forget what you’ve achieved together over the course of your relationship. Create a customized progress report like the one shown below to illustrate the services and value you’ve provided over the years. Talk your clients through this summary and highlight the benefits of your advice.

7. Review investment costs.

Whether you’re operating a fee-based or a commission-based practice, it’s in the best interests of both you and your client to review investment costs regularly (e.g., when new investments are being made and during regular review meetings). Here are some best practices from top industry professionals:

1. Keep it succinct. Spend some time to craft an easy-to-digest message around fees. This is not a time to use industry jargon and acronyms (such as MER, DSC, etc.). While you’ll have to explain the concepts, focus on what your clients really want to know about costs and use plain language.

2. Be confident. Use dollars and cents, not percentages. Investors want to know exactly what they’re paying and it’s best they hear it from you rather than one of your competitors. Here’s an example script: “The fees for your portfolio are approximately $_____ per year. The services you receive for these fees include ______.” Point c, below, gets into those services.

3. Let them know what they’re getting for those fees. Remember, investment costs are only an issue in the absence of value. Ensure you explain the support clients are receiving from each service provider. Here are some examples:

• Investment company: Professional portfolio management, client services and administrative support. The investment company also pays the GST and HST on the fund.
• Advisor dealership: Compliance and oversight, access to wealth management experts, statements and reports.
• Advisor and team: Wealth management, coaching, advice and ongoing monitoring, tax minimization.

8. Review your services.

An advisor recently told a story of a client she’d worked with for over 15 years. At the client’s review meeting, he mentioned he’d just arranged new disability coverage from his bank. The advisor was surprised, as she was certain her client knew that she provided a variety of insurance options. He’d forgotten. The advisor blamed herself for not reviewing her full range of offerings regularly with the client. The lesson here? It’s never a bad idea to reiterate the depth and breadth of services you offer. Find time during your regular client review meeting to position your value by using stories of real client situations and how you helped them. Think of ways to expand the services you are currently providing to the client.

Example: “Now you understand the costs of our services, it’s also important you’re aware of the full range of services we provide. I was recently working with a client similar to you and thought perhaps you may also find _________ worthwhile.”

9. Discuss client matters.

Show your clients that your services and advice extend well beyond their financial lives. Set aside time during your meeting to discuss any topics of importance to them and remember these do not necessarily have to be related to finances, such as:

• caring for aging parents;
• selecting a university for teenage children; and
• taking on a business partner.

10. Create a meeting action plan.

Summarize the important issues discussed during your meeting and the action items established between you and your client. After your meeting, prepare a summary and action plan to send to your clients within a week. Remind them you are happy to review their investments costs at any time.

Never underestimate the importance of open, transparent conversations with your clients. Investors need a clear understanding of the fees they are paying and what they’re getting in return. Be confident about the positive impact you have on your clients’ lives and remember that the fee and value conversation should be ongoing. Revisit costs and value regularly to strengthen your relationships and cement client loyalty.

SECTION TWO: 3 ways to convey your value to clients

As we enter an era of fee transparency, it’s important to recognize that fees are only an issue in the absence of value. Many advisors feel they make a positive difference to their clients’ pocketbooks and peace of mind, but how do you ensure your clients understand and appreciate the impact of your advice? Top-performing advisors not only regularly remind clients of the unique value they deliver, but they also market themselves as indispensable. In this section, we’ll outline fundamental communication strategies to position yourself as the advisor clients can’t live without.

Strategy #1: Back up your claims

Third-party research can be a powerful way to highlight the benefits of sound professional financial advice. We’re not suggesting you bombard your clients with whitepapers, but rather utilize key points from reputable research in simple marketing pieces. The example below includes quantifiable evidence that reiterates the value of working with a financial professional:

Click on the image to enlarge it.

This piece serves as a reminder to existing clients that they are much better off working with you than going at it alone. You can also use third-party research like this during initial meetings with potential prospects, particularly do-it-yourself investors who may be dubious about working with a financial professional. Studies show that if you use third-party research to back up your messaging, clients are more likely to believe it.

The key is to use research from a reputable source to back up your track record of success with clients. By providing both qualitative and quantitative research, you can demonstrate that assets are higher for clients who use an advisor and that those clients feel more comfortable and confident. The research should reiterate the various roles of the advisor (educator, coach and leader).

Strategy #2: Appeal to the whole brain

It’s not just about the numbers. While performance is certainly important, for many investors it’s not the primary reason they work with a particular advisor. In fact, research shows that prospects place higher importance on trustworthiness, transparency and frequent, personalized communication. Canadian investors are more interested in the relationship they have with their advisor – so keep performance in your tool kit, but don’t open with it. To best position yourself as an indispensable part of your clients’ lives, appeal to both sides of your client’s brain. While the left brain focuses on logic, numbers and analysis, the right brain focuses on “softer” things like family and relationships (see the diagram below). To engage the right brain, think of three simple sentences that summarize your commitment to your clients. Use these in prospect meetings to help investors understand your relationship values or in regular review meetings with existing clients.

EXAMPLE:

• “Our relationship is a partnership. To provide the best plan for you and your family, I will ask you a lot of questions to ensure I understand your whole life picture.”
• “Your success is my success. I provide objective recommendations and take the worry out of the investment process. My goal is to provide you with peace of mind.”
• “My focus is on the service and experience you receive. Periodically, I will ask you for feedback on how we are doing and any areas we could improve on.”

These messages may evolve over time, but should accurately represent your approach to building and nurturing strong client relationships. The key is to take a whole brain approach, appealing to both sides of your client’s grey matter.

Strategy #3: Use examples

Have you ever noticed how you end up working with clients who are similar to you? Advisors tend to attract clients who have similar interests, values and beliefs. There’s a reason most investors meet their advisor through a referral from a family member or friend – they want to work with an advisor who works with others just like them.

When working with new clients, be sure to bring up examples of ways you’ve helped other clients facing similar challenges. Client confidentiality is critical, but prospects will feel more confident about your skills and services if you provide concrete examples of effective solutions you’ve provided to those in a similar situation. To represent yourself as indispensable, make sure the examples you select include things the client couldn’t or wouldn’t do on their own. Keep it succinct: explain the service you delivered and the positive result.

EXAMPLE: “Last year I began working with a business owner like you and discovered he wasn’t utilizing two key strategies to minimize tax. By making some adjustments to the way he took income from the business, I was able to save him $80,000 in tax this year.”

As outlined in the previous section, you can also use this strategy with clients you have worked with over many years. Using a real-life example is an excellent way to introduce a new service to current clients who may not be aware of your full offering. This will boost your client’s understanding of your value.

EXAMPLE: “How are your parents doing? I met with a client last week who is similar in age to you and she mentioned she had concerns about long-term care for her parents. I’m working on a suitable plan for her now and thought you may also find this worthwhile now or in the future.”

Use a grid like the one shown below to help you share client stories. Relate a compelling client case to a specific service on the grid so your client or prospect understands the impact of that service.

Remember that fees are only an issue in the absence of value, so taking the time to craft concise messages that convey the impact of your advice will help your clients view you as an indispensable part of their lives. Confidently communicating your value on a regular basis, and delivering on it in tangible ways, will make fees a non-issue and safeguard your success in the new environment.

SECTION THREE: 3 ways to boost your value

“Innovation distinguishes between a leader and a follower.” – Steve Jobs

Advisors who innovate and add value will flourish in our industry’s changing environment. We’ve already explored best practices to communicate your value. In this section, we’re going to look at value boosters: quick and easy ways to enhance your value in your clients’ eyes.

Value Assessment: Take a good look at your top 20

To ensure you’re delivering consistent value to your most important clients, we encourage you to take an objective look at your book. To start, take a snapshot of each of your top 20 client accounts (regardless of book size) and conduct a value check-in, like the one shown below:

Regardless of how you answer the check-in questions, it’s sensible to boost value by adding more services for these important clients. First, ensure your clients understand the impact of your advice, as well as the full range of services you currently offer. Then consider adding additional services, or value boosters, to enhance the value you deliver.

Boost your value

For many advisors, the thought of adding new services can be overwhelming, but value-booster services are easy to implement while delivering maximum impact. Below are three simple services you can incorporate into your business today to help kick your value into high gear.

Value Booster #1: Orchestrate a family meeting to discuss finances between generations

Many clients don’t talk about what will happen to their estates once they are gone. They neglect discussing their financial plans with family members and their advisors unknowingly let this happen.

Clients are looking for leadership in outlining and communicating their plans to the next generation, and this is where you can add value. Make this process more effective by hosting a family meeting to help your clients have open conversations with their families about their wishes for the future. These meetings are in the clients’ best interest, will increase their level of engagement and reduce the risk of lost assets. Here are three simple steps for successful intergenerational meetings:

1. Set the agenda. An important first step is to position the meeting and help clients understand the importance of discussing these matters. Mention, for example, a study by the Institute for Preparing Heirs that found the number one reason for families losing assets during a wealth transfer is not faulty estate planning or lack of appropriate documentation, but lack of communication within the family. You can also use real-life examples of families who did not communicate effectively and explain the repercussions of that inaction. Once your clients agree to the meeting, have a conversation with them to establish what they’d like to cover in the meeting. Also find out what they may want to purposely exclude from the discussion. Determine an appropriate agenda beforehand, such as clarifying the roles and responsibilities in the family. Suggest your clients invite all significant inheritors and/or those who will play a role in your clients’ estate planning (power of attorney, person making long-term care decisions, etc.) In most cases, your clients will invite their adult children. You may wish to suggest your clients’ exclude their childrens’ spouses during this initial meeting as a smaller group will encourage more open communication.

2. Host the meeting. The main objective of the meeting is to open up discussion and encourage collaboration with family members. Follow the agenda your primary clients have set, like in the example shown below:

As the meeting host, be cognizant of the emotional impact of these discussions. When opening the meeting, encourage inheritors to really listen to the wishes of your primary clients. The meeting is not designed to debate decisions, but to allow your clients to share their wishes and assign responsibilities. Your role is to be an objective third party and help your primary clients convey this important information in a clear way. You can minimize potential negative feelings from the inheritors by encouraging your primary clients to explain the reasoning behind their decisions, and their wishes for their heirs in the future.

3. Follow up in writing: After the meeting, put the plan in writing and confirm all involved parties understand their role and responsibilities. You may find clients or their heirs would like to make changes to the plan after they’ve had time to reflect on the meeting. For example, an adult child may not feel comfortable making healthcare decisions on behalf of a parent, so an amendment to the plan would be necessary. Be sure to revisit the plan with your clients during review meetings to keep it current and relevant.

By having these family meetings and creating a dialogue between generations, you will understand your clients more deeply and begin to build a connection with the next generation.

Value Booster #2: Facilitate meetings between a lawyer and your top clients

As we saw in Value Booster #1, there are some subjects your clients are reluctant to talk about, but part of your role is to encourage your clients to take action on protecting their legacies after they’re gone. Invite a lawyer to your offices once a month or quarter to facilitate a meeting with your top clients. The objective is to update their wills and address other estate planning issues as a team. Follow the three action steps below:

1. Pick three clients per month/quarter: We know clients can be less than enthusiastic about estate planning and tend to procrastinate. By inviting a lawyer to your office and setting up a team meeting, you are making the process as pain-free as possible. Focus this exclusive value booster on clients who aren’t currently working with a legal professional, have significant assets with you and would appreciate this service. This can form part of their annual review, or you may wish to book this as an additional meeting following their review. Ask the lawyer to clarify his or her fees for this service in advance and ensure your clients are in agreement.

2. Review wills, estate plan and financial plan: Take the time to review your clients’ existing plans as a team. Ensure their wills, estate plans and financial plans are aligned and accurately reflect your clients’ wishes. By taking a collaborative team approach, you can make certain all angles are covered and provide your clients with peace of mind. Should your client wish to work with the lawyer beyond this initial meeting, make sure your client understands they will become a direct client of the lawyer.

3. Create an action plan: Be sure to send out a summary of the meeting to the lawyer and the client, along with action steps for each individual. Encourage your client to review their wills and plans on an annual basis or as their circumstances change.

By taking the lead and encouraging clients to act on something they may have been avoiding, they will see your role in a broader context and consider seeking your advice on all their planning needs.

Value Booster #3: Educate on education

Many advisors put savings and investment plans in place to ensure clients have enough money to cover the costs of post-secondary education for their children. But what happens when the time comes to select an institution? More than 1 million Canadians enroll in undergraduate programs each year and there are 22,000 universities to choose from worldwide. Help your clients navigate the process of selecting a post-secondary institution for their children using the following steps:

1. Start early: Review your top client files and check the ages of their dependants to assess whether they are nearing university age. If so, check in to see if your clients and their children have already discussed post-secondary options – chances are they have some institutions in mind. Suggest a meeting to discuss potential costs, locations and criteria for selecting the most suitable institution.

2. Moderate the meeting: Using a tool like the one shown below, help your client and their university-bound child to assess the institutions they have in mind. Act as an objective third party, providing guidance and information, but not influencing the final decision.

Click on the image to enlarge it.

3. Summarize: Follow up with your client(s) and offer further information and guidance if needed. Keep in touch throughout the application and enrollment process. This demonstrates your ability to not only help them prepare for life events, but to guide them through the experience.

By demonstrating your interest and willingness to help your client and their family, you can boost value and enhance loyalty.

Continuously adding value is a key part of aligning your business with the changing environment and value boosters are a relatively easy way to do just that. Every business is different, so while the examples above may work well for your clients, give some thought to other simple services you can add to have maximum impact on your clients’ lives.

SECTION FOUR: 18 ways to help clients in transition

Strong client relationships are often the most important factor in determining success. Continually looking for ways to enhance relationships will help you to bolster loyalty, increase referrals and grow your business. In this final section, we’ll look at a relationship-building service you can provide to strengthen your connection with clients.

Be a Transition Mentor

Life transitions such as divorce, loss of a spouse and retirement can be debilitating. As advisors, you regularly help clients with the financial aspects of major life events. Many of you studied for years to qualify for your CFP or CLU, for example, to ensure you’re equipped to provide advice to clients. However, it’s not often that advisor education teaches you how to assist clients with the psychological aspects of challenging life transitions. Top advisors have developed transition support skills, meaning they understand the complex emotional stages clients go through as they deal with a difficult life event. Developing these skills can also help you, as advisors, to provide emotional support and practical advice as clients transition to their new realities.

Dealing with a major life transition can create uncertainty and heightened emotions. As a result, your clients should avoid big, irreversible decisions during this time. Some clients will find it challenging to make any sort of decision, while others may make rash decisions they’ll later regret. What they need is a Transition Mentor. As a Transition Mentor, you can utilize your experience in guiding clients through the unfamiliar terrain of their life transitions to help others facing similar events.

The initial transition stage

Whatever the life event, it’s critical to speak with clients as soon as they’re comfortable to do so. Initially, clients may be numb, consumed with grief or completely unlike their normal selves. During this phase, conduct financial triage to help you understand their situation and prioritize their most important planning needs using the steps outlined below:

1. Get the backstory: Find out what happened

Choose your words carefully as you investigate what’s happened. Here are some examples of discovery questions you can use to find out more and support your clients in a meaningful way.

• Tell me about what’s happened.
• How are you feeling right now?
• What’s worrying you the most?
• What can I do specifically to help you?
• What are your most urgent priorities?

2. Be aware: Recognize transition fatigue

Although many symptoms of transition fatigue are only temporary, your tolerance, sympathy and empathy skills are essential during this phase. Clients may:

• seem overwhelmed, exhausted or confused;
• have a shortened or fractured attention span, with a narrow focus;
• want to avoid decisions, or make decisions out of fear;
• exhibit unusual behaviour, such as hyper-reactivity or combativeness; or
• have a victim mentality.

3. Prioritize next steps

Use an action plan like the one shown below. The objective is to uncover issues, assess your client’s knowledge gap and establish priorities.

Life transitions: examples and ways you can help

Not every life event is the same. Once you’ve conducted the steps above, you can provide support based on the type of challenge your client is facing.

In this section, we’ll explore three examples of common life events.

Business transitions

More than half of family businesses are expected to change hands by 2019. So why don’t business owners focus on transition planning? Some say they’re just too busy running their businesses to think about a succession plan and many owners mistakenly think it will all work out in the end. Your job is to help the owner define their goals, determine their readiness and figure out the options that will help them meet those goals.

Action Steps:

• Prepare heirs early. If the client is planning to transition their business to a family member, encourage them to prepare the next generation early. When your client is 10 to 15 years away from retirement, it’s a sensible time to start discussing their future exit strategy.
• Help your clients with the emotional aspects of their transition. Acknowledge their feelings, reassure them and help them understand why they are reacting this way.
• Create a comprehensive exit plan. This is crucial to the future success of the business and will provide the owner with peace of mind. Help them create this plan over time and be sure to include important details, such as timing, tax implications, staff retention, training the successor, business reputation, etc.
• Help them to envision and plan their post-business life. Clients struggle to imagine what life will be like after they exit their business. Encourage them to not only daydream about their retirement, but to think of specific things they’d like to do.
• Support clients as they relinquish control. Help them as they let go of the reins. Provide encouragement and reassurance as they transition to their new world. For example, suggest your clients shift their focus to projects unrelated to their business, like volunteer work or projects at home they’ve been putting off. Celebrate non-job related milestones with them and help them to set practical goals in retirement.

Death of a spouse

There are more than 1.2 million widows and widowers in Canada and, although life expectancy for both genders has increased, the majority of those left behind are female. As an advisor, it’s crucial to recognize your client’s grief and demonstrate your sympathy and support. Here are some action steps you can take.

• Choose your language carefully. After a loss, demonstrate your empathy by saying something meaningful like “I can’t imagine how difficult this is.” Avoid relating your own stories of loss and instead focus on listening to your client.
• Be open to whatever form the healing process takes. It can be uncomfortable seeing a client feeling emotional or tearful, but remember this is part of the healing process. The fact that your client can be open with you during one of the most difficult times in their lives shows that they view you as more than just a financial advisor.
• Use the partner’s name. When a spouse dies, people are often reluctant to say the person’s name. It’s almost as though they feel speaking the name will upset the person left behind, but the opposite is often true. As your client begins to heal, speaking about the lost spouse and telling stories can be cathartic and bring back great memories.
• Ask about support. We often presume people have a huge network of people they can count on, but this often isn’t the case. Ask who is helping them and encourage them to delegate certain tasks to close friends and family members.
• Stay in touch. When a person loses a spouse, initially they are flooded with support and flowers. But as time goes on, usually after the funeral or service, support can dwindle. This is where you can make a huge impact by checking in with your clients regularly to let them know you’re thinking of them and to see how they’re coping.

Divorce

Research shows that 20% of financial advisors don’t reach out at all when a client is getting divorced, yet this can be a time when clients need their advisors the most. Although clients may be feeling angry, embarrassed or bitter, it’s a good idea to get in touch as soon as possible and partner with your clients as they face this challenging life event. Here are some action steps you can take.

• Provide practical information. Help your clients remain sensible during this trying process by simplifying critical next steps. Use the Life Changes example shown above to prioritize financial matters.
• Never assume you know why they’re getting divorced. Your client may never share with you the true reason for their divorce, but in some ways that’s irrelevant — part of your role is to be an objective third party and help them move forward.
• Refrain from providing personal advice. It’s human nature to want to provide personal advice or anecdotes, but divorce can be the most financially expensive life event for clients, so it’s better to focus on the financial aspects, where you can help the most.
• Preserve confidentiality. It can be challenging to remain impartial if you advise both clients. In some cases, you may wish to refer one spouse to another reputable advisor to help you remain neutral.
• Stay in the loop. As your client’s personal life and financial position evolve, ensure you keep in touch to update your client’s financial plan in line with their new situation. As your clients go through the initial stages of separation and divorce, we recommend you contact them quarterly.

By developing transition support skills and utilizing your unique experience with clients, you can act as a responsible partner, educator and guide for investors facing difficult life transitions. This expertise will demonstrate your value and increase client commitment as they move forward toward their new reality.

By Anne Manson, Vice-President Strategic Business Development, CI Investments and Doug Towill, Senior Vice-President Strategic Business Development, CI Investments

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